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UAE Inflation Likely at 12.9 per cent in 2008: IMF

DUBAI - Inflation in the UAE is likely to be 12.9 per cent in 2008, higher than 11.1 per cent in 2007, before easing to 10.8 per cent in 2009, according to International Monetary Fund’s latest regional economic outlook report for the Middle East and Central Asia.

The IMF report, released on Monday, said that the inflation has emerged as a key issue in the Middle East and Central Asia, and is well above the average and emerging market countries.

According to the report, UAE’s real gross domestic product growth is projected to slow to 7.0 per cent in 2008, compared with an estimated 7.4 per cent in 2007, and to 6.0 per cent in 2009.

It said that UAE’s non-oil GDP growth is projected to be 8.1 per cent in 2008, less than an estimated 8.8 per cent in 2007, and 7.1 per cent in 2009. Whereas, oil GDP growth is likely to remain constant at 3.5 per cent in 2008 and 2009, unchanged from unchanged 2007 estimates. The report said that the global credit crisis thus far has had a mixed impact on regional financial markets. Most equity markets are down from highs achieved in 2007 and early 2008, it said and added sovereign spreads have widened across ME and Central Asia, but domestic bond markets have stayed “broadly steady” in most countries. Continued efforts are needed to boost the resilience and flexibility of the region’s financial markets in order to reduce effects of the global credit crisis the report stated.

“Policymakers should aim to strengthen the banking system further and remain vigilant to any effects from the global credit crisis,” the report said and added policymakers should closely monitor developments in real estate prices and assess vulnerabilities of the financial system to property prices corrections and liquidity pressures.

imranmaqbool@khaleejtimes.com